Freedom from Budgeting

The following is a guest post from Luke, the guy behind NeoBudget, an online budgeting system using the envelope method.

The title of this article is intentionally deceptive.  This is not an argument against budgeting.  Contrary to what you may have heard, budgeting is a liberating experience.  Creating a budget and sticking to it can be one of the most freeing experiences of your financial life.  I've seen this happen in my own life and in the lives of several friends.

Just so we're all on the same page, let me define what I mean by the term "budget".  A budget is simply a plan for your money.  In order to plan your money, you need to know where your money comes from and where it goes.  Budgeting is a way of controlling where your money goes.  It doesn't mean you can't eat out every night, it simply means you would plan for eating out every night and know you have money available to do so.

I've never seen anyone regret budgeting once they get the hang of it.  I've helped many people get started with a budget, and they all say the same types of things: "It's great knowing I will have money at the end of the month for all my bills," "My wife and I don't fight over money any more," and "I actually spend more on recreation now that I'm not nervous about paying my bills."

Here are some of the freedoms provided by a good budget:

• Freedom in your marriage.  Money is one of the leading causes of divorce in the US.  It stands to reason that even when it doesn't lead to divorce, money can still be a significant cause of stress in a marriage.  One spouse may spend a lot of money, while the other is working hard to find money to pay the bills.  More likely than not, they both think the main problem is with their spouse, not themselves.  Creating a budget together and sticking to it together can relieve the stress.  You both have defined goals, and both can work to meet those goals.

• Freedom to sleep.  A budget lets you know how much money is coming in, and how much money is going out.  You should figure out your bills and other expenses, and reserve enough money to pay them.  Money left over is yours to spend (or save) how you want.  No more sleepless nights wondering if you have enough money in the bank to pay your bills for the month.  You know that you do, or you know that you don't.  If you discover that you don't have enough money to pay the bills, you have the information necessary to take action and resolve the problem by cutting expenses and trimming back.

• Freedom to give.  One thing I've enjoyed most about budgeting is that I can budget a certain amount to give.  Without a budget, I would be a hoarder.  I would be afraid that I couldn't pay the bills, so I wouldn't spend or give anything away.  With a budget, I know how much I can give away without hurting my family's financial stability.

• Freedom to remember.  It's amazing how money can slip through your fingers without you realizing it.  This happens to me all the time if I carry cash in my wallet.  It's gone before I know it, and looking back I have a hard time remembering how it was spent.  Keeping track of your spending helps you see where you spend your paycheck.

• Freedom to have fun.  As I mentioned in the introduction, creating a budget doesn't mean you have to stop spending money on fun.  If you want to eat out every night, budget for it.  You'll know if it's going to hinder your ability to pay the bills.  If you can afford it, and you budget for it, then you can eat out every night without feeling guilty when you pay the check.

Shining light in the dark corners of your financial life can be a frightening experience.  Enough so that you might consider keeping the truth about your checking account in the dark.  But, once you honestly evaluate your financial situation and create a budget you'll discover, like I did, the financial freedom and peace of mind that can follow.

Comments

[Brian]

Great advice! I am actually a NeoBudget user and I love your site!!! Keep up the good work.

[carole]

I am just starting the You Need A Budget system, and am actually excited about really understanding how I am spending my money. Not knowing is much worse.

[hizmoney]

The article, "Freedom from Budgeting" is excellent. I think there are more benefits having a realistic Budget or Spending Plan than not having one. In my opinion, this is an essential tool if you are in debt and trying to get out of debt.

[Nathon, Household Budget Nerd]

Luke, this is awesome:

"Budgeting is a way of controlling where your money goes. It doesn't mean you can't eat out every night, it simply means you would plan for eating out every night and know you have money available to do so."

I agree completely.